Kenya Revenue Authority (KRA) has launched the Electronic Rental Tax Information System (eRITS), as it aims to transform rental income tax compliance.
- •This follows failure of the iTax system, which depends on self-assessment, and previous initiatives such as tax amnesties and property data collection, to bring all landlords into the tax net.
- •Treasury and the KRA are hoping that the voluntary compliance system will boost rental tax yields as part of efforts to broaden the tax base.
- •The taxman currently collects just Kshs. 17 billion annually from rental income—far below the estimated potential of over Kshs. 100 billion, which represents only 17% of expected revenue.
“With this system, we aim to not only increase revenue collection but also create a more equitable and predictable tax environment that benefits both taxpayers and the government.” National Treasury Principal Secretary Chris Kiptoo said during the launch.
“Our journey forward is demanding,” said Kiptoo, citing the growing pressures of rising expenditures and public debt. “To address this, Kenya must broaden its tax base, identify new revenue streams, and optimize collections across all sectors.”
According to KRA Commissioner General, Humphrey Wattanga the system is a voluntary compliance tool that aims to support and enhance tax compliance among rental property owners and agents.
“eRITS is designed to enable seamless integration with the KRA ecosystem for purposes of tax computation, filing, and payment; and is accessible through the Gava Connect API portal for system-to-system integration, and as a service through the eCitizen platform. The intention is to augment voluntary compliance within the sector while reducing administrative burdens associated with taxation,” he said.
Kiptoo pointed out that Kenya’s tax revenue as a percentage of GDP remains below the East African Community (EAC) target of 25%. In response, the government has reviewed the tax policy framework and developed two policy documents: the National Tax Policy and the Medium-Term Revenue Strategy (MTRS).
